Demand curve shifters

Learning Objectives

Summary

Demand curve shifters are factors that shift the demand curve either left or right.

Important

Movement along the curve → price changes

Shift along the curve → change in non-price factors

LEFT
- factor causes quantity demanded at each price to decrease; $Q_{d}$ falls → whole demand curve shifts to the left
- decreases willingness to pay
- e.g. KitKats – presence of substitutes, preference for healthier snacks, less pocket money
RIGHT
- factor causes quantity demanded at each price to increase → whole demand curve shifts to the right → higher willingness to pay
- this is by quantity of good consumers want to buy, regardless of price
- e.g. KitKats – students hungrier after a 5-hour class, more money for discretionary food items, no substitutes available
monotonic: if you like a good more, it shifts; if you like it even more, it shifts in the same direction

availability of substitutes
preference
changes in prices of substitutes (‘in place of’)
- cheaper substitutes → consumers buy those → less demand for the OG Product A
- more expensive substitutes → consumers go to Product A
price/availability of complements (‘together with’)
- e.g. laptops & software going hand-in-hand
number of buyers (population)
income of buyers
- income ↑ = demand for NORMAL GOOD ↑ (most goods – e.g. household appliances, food, clothes)
- income ↑ = demand for INFERIOR GOOD ↓ (instant noodles, canned meals)
- neutral goods: regardless of income, e.g. you wouldn’t buy lots more toothpaste if you became a millionaire tomorrow
expectations about the future
- ↓ expectations = ↑ demand
  - e.g. price to increase, or scarcity
- ↑ expectations = ↓ demand
  - complacency that product is always going to be there